Too Little (Or Too Much) Too Late?

So, there are some common concerns you might have about your retirement / financial future. I guess they’re all pretty natural concerns to have. But you might not share these concerns, though, because you feel you have enough. How do you know? What if you’re wrong? What if you’ve got too much?

What Do You Want?I’ve heard it said that retirement planning is about making sure you have enough money to cover the cost of your bills and a modest lifestyle. It’s about having enough INCOME.

I’m not sure I agree. My view is that retirement’s not about income… it’s about EXPENDITURE! It’s about deciding what kind of lifestyle fills the last 3rd of your life:

What do you want to do?

How do you want to live?

How do you want to help your loved ones?

This is all about EXPENDITURE.

You see, most of us are built to be conservative. To spend within our means, not be flash, to keep things modest. That’s all great, but LIFE’S NOT A REHEARSAL and, I feel, it’s important to get as much fun out of this short time we have as possible… before it’s too late.

The 3 Stages of ExpenditureAs you approach retirement, you can look forward to the last 3 stages of expenditure you’re going to have in your life. Dramatic but true.

Current StageThis is (obviously) what you’re spending now. What does your current lifestyle cost you? Of course, you’ll be paying for the essentials (bills, food, pet insurance, etc.) but what else is there? What else are you spending your money on? Where does it all go?! I believe it’s a really good idea to better understand what you’re spending your money on. Many clients find it an eye-opening experience.

‘Have Fun’ StageThis is PRIMTIME. This is the period in your life where you might want to do all the things you planned to do and now you have plenty of time to do them! But have you got enough money? What are your dreams? What’s on your bucket list? You still need to pay for food and pet insurance, as before, but are there things you’d love to do but have never had the time? Now’s the time to do them. It could be a window of 10 to 15 years so don’t have any regrets!

‘Too Old’ StageNow you’re too old to do stuff. You might have trouble getting up the stairs, let alone a mountain! It happens to us all. During this stage, you’ll probably want financial security and peace of mind. To know that everything’s in order. In this stage of expenditure, it’s likely that your spending will go down, for obvious reasons.

‘Ah, Marco, but what about care costs? That could ruin everything’. You have a point, of course but do you REALLY want to be denying yourself fun now, just in case you need to go in to care later in life?

Time to Say GoodbyeAnd then you leave us and that’s you done. Unless you know something different (I’d love to hear it if you do), you’ll die. The one good thing about this part of things is that it won’t cost you anything!

What Could Happen?I can tell you that one of two things will happen.

Either you’ll misjudge things and find out you DON’T have enough money (not good). This means you’ll have to trim (or slash) your lifestyle to make ends meet. All those years of work and now you don’t have enough money to enjoy yourself. Or, you’ll have too much money and you won’t have spent it or given it to the people you love and care for.

The first outcome isn’t good for obvious reasons. The second one, though, is worse in my opinion. Let me explain why. All your life, you’ve paid tax. Income tac, capital gains tax, fuel tax, VAT, national insurance. The list goes on… If you die with too much money, another chunk of tax (inheritance tax) could go to Her Majesty’s Tax Collectors.

But worse than tax, could dying with too much money mean:

You didn’t do more when you had the chance?

You didn’t plan and only found out when it was too late you could have done more?

You could have retired earlier and spent more time doing stuff you love?

You could have passed on more to your loved ones without the big tax hit?

Heavy stuff but I hope I’ve made my point. Take the time to understand what your future will look like. At the very least, it will help you prepare for what’s coming, but it could also be that you can do something to change things. That’s powerful!

If you’re still with me, thanks for sticking around. I’ll catch up with you next time…

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